When I first learned how to code, I read a book called Automate the Boring Stuff. That title has stuck with me for more than a decade, and I find it to be a lesson many companies learn the hard way by fighting it instead of embracing tech.
It turns out that Audi is one of those companies that learned just how beneficial automation can be after its partnership in China helped it rethink the way it built cars.
Welcome back to Critical Materials, your daily roundup for all things electric and tech in the automotive space. On today's docket: how Audi is rethinking car manufacturing, BYD and Xiaomi overtake Tesla as a tech leader and Nissan is still trying to stop the bleeding. Let's jump in.
30%: Audi Set Up Shop In China To Build Cars. China Rebuilt Audi Instead.
When Audi set up shop in China, it thought it was going there to show off its German engineering prowess. Vorsprung durch Technik—Progress through Technology—is its slogan, after all. But over time, Audi learned from China what happens when efficiency, policy and robots (like, a lot of robots) come together.
The automaker's operation in Changchun more recently became the pinnacle of Audi's factories, at least as far as automation is concerned. Thanks to a decade-long push from the Chinese government, Beijing's "Made in China" plan helped to promote the domestic manufacturing of goods not only by bolstering manufacturing but also creating the tools needed to efficiently modernize the production line. In short: robots.
Audi took full advantage of this. And after discovering just how cost-effective it had become to build with some helping robotic hands, it never stopped. The Financial Times has the nitty-gritty:
Industrial robots from Chinese-owned companies—one of the key targets of the policy—dominate the production line, starting with an automated press that stamps metal sheets into door panels.
Next, more than 800 robots from Chinese-owned Kuka weld pieces into car frames, while another Chinese supplier has automated the wheel installation process. The robots outnumber the humans on each shift.
“We weren’t expecting to automate so many processes in China, but the Chinese suppliers’ pricing is very low,” says Tobias Liebeck, Audi’s head of manufacturing engineering at the Changchun plant. China now has more robots per 10,000 workers than Germany.
Robots are a big thing right now. Just ask Tesla, which supposedly has plans to use its humanoid Optimus robots at its own production plants. And why wouldn't they be? They don't get sick, they can't get tired on the line because they were out partying the night before and—the most capitalistic way to think about it—you don't actually have to pay robots a wage. (If you can figure it out, of course.)
Liebeck said that a set of Optimus-like robots tested at its facility seemed promising. However, humanoid might seem like a good idea, but Audi quickly found that the tech isn't as effective as one might think. “We don’t want [robots with] two arms, we want four or five arms," he said.
Audi's robotic revolution is proof that China's industrialization push morphed a seemingly bureaucratic slogan into a real transformation for local manufacturing. It's borderline frightening in scale if you really think about it—just look at how cost-effective local automakers have managed to make EVs.
This comes, of course, thanks to Chinese state-backed incentives, subsidies and sheer market gravity. Sure, Audi took advantage of it, but so did nearly every other automaker and Chinese EV startup. Perhaps that's the reason that so many pop-up automakers have sprung into existence over the past few years in China. But the biggest players, like BYD, are now ready to grow outside of China. Other countries that rely on auto manufacturing are looking on in horror at the rate of growth and are now using politics to pump the brakes.
"The market distortions in China are so big that it prevents fair competition everywhere," said Camille Boullenois, associate director at Rhodium Group. "You have to have higher trade barriers to protect your nascent industries."
By localizing production and tooling alongside domestic partners that were doing the same, Audi's Chinese partnership was able to fast-forward its own automation roadmap and even take its lessons learned back home as it transformed the Baden-Wurttemberg production line into a smart factory of its own. A prime example of a teacher becoming the student.
60%: BYD, Xiaomi Overtake Tesla As 'Technology Leader' In China
After years of being worshiped like some sort of battery-powered space deity, Tesla has officially lost its cool-kid badge. Worse yet, it happened in the world's biggest EV playground: China.
According to a recent UBS survey, consumer interest in Tesla's brand is declining all over the world. But for China in particular, the once-thriving automaker is now being pushed aside by local players. Just 14% of survey respondents saw Tesla as a top EV brand choice (down 4% year-over-year), placing it behind both BYD and newcomer Xiaomi.
Yes, Xiaomi—the phone company turned (somewhat controversial) automaker. The same one that makes electric screwdrivers, robot vacuums and dehumidifiers. It turns out that it's also building cars that people in China actually want more than Tesla's cyber sleds.
"In China, we see intense competition and Tesla is no longer seen as the technology leader," reads a note by UBS analyst Joseph Spak. He also mentions that UBS believes Musk's political involvement has caused brand damage in Europe.
Here's the South China Morning Post with some context:
The UBS survey underscored how China’s brutally competitive EV industry is churning out home-grown champions that are outshining once-illustrious marques like General Motors, Toyota Motors and Tesla. China overtook the US as the world’s largest vehicle market in 2009 and it now assembles more EVs per year than the rest of the world combined.
Tesla has led China’s premium EV market segment since 2020, accounting for more than 16 per cent of total electric-car sales nationwide. Its 2024 sales of 657,000 units gave it a 6 per cent share of the mainland market. To date, China remains Tesla’s second-largest market worldwide after the US.
“Chinese carmakers are able to churn out smarter models than Tesla’s Model 3 and Model Y vehicles at lower costs,” said Gao Shen, an independent analyst in Shanghai. “The rise of local brands have largely siphoned off buying interest in Tesla cars.”
To SCMP's point, Tesla is facing a problem that many Western automakers are succumbing to right now. Chinese-built vehicles are just more desirable to local consumers, and that's quickly becoming a problem for just about every single foreign automaker trying to peddle their cars in China. The good news for Tesla is that it's at least still the most favorable foreign brand.
Tesla still has some cachet left in its home market, but it looks like China (and possibly other markets) are moving on despite CEO Elon Musk's assurance that the company is doing just fine. The company that made the world care about EVs is quickly learning just how quickly the crown can slip, especially if a brand doesn't stay fresh and innovative. And right now? Tesla might as well be lined with Teflon.
90%: Nissan Is Still Trying To Stop The Bleed
Despite a new CEO, Nissan is still hurting after a failed merger with Honda. The new captain, Ivan Espinosa, is doing everything he can to keep the ship afloat—including the corporate equivalent of throwing furniture overboard.
In an email sent to staff seen by Reuters, Nissan has reportedly begun to offer buyouts to workers and put a plug in all merit-based raises in an attempt to further reduce operating costs. The move is the latest in a series of strategic actions taken by the new CEO to help combat weak sales, especially in North America, where Nissan took a particularly brutal beating last year when it spent 99% of its Q2 profits trying to convince new car buyers to drive a Nissan off the lot.
Reuters has the details:
Nissan has started offering buyouts to U.S. workers and has suspended merit-based wage increases worldwide, internal emails reviewed by Reuters showed, as the automaker expands cost cuts amid weak performance in key markets.
CEO Ivan Espinosa announced a new round of cost cuts this month that include closing seven production sites globally and cutting 11,000 more jobs, taking its total planned workforce reduction to around 20,000.
As part of the cuts, Nissan has offered separation packages to workers at its Canton plant in Mississippi as well as to salaried workers in human resources, planning, information technology and finance, showed one email sent last week.
One of the reasons that Honda's merger with Nissan could have been such a great partnership is that Nissan is a production powerhouse. It has a ton of assembly capacity stationed around the world. But without people actually buying its cars, the automaker has excess workforce—roughly the size of a small town, it would seem—that is bleeding money. The layoffs are necessary to "right-size Nissan," according to Americas Chairman Christian Meunier, and are "crucial for Nissan's comeback."
In reality, Nissan has much more to worry about. Its malaise is nothing short of something its executives should have seen coming, especially with aging products, very little technical innovation and only a few EV and hybrid options in its lineup.
The automaker has said that it's working to turn itself around, especially with a "real car guy" at the helm. On the outside, its so-called comeback is looking more like a controlled demolition. Huge EV projects cancelled, layoffs and an unknown future make the entire ordeal look like an uphill battle for the Japanese brand. So if this truly is a turnaround, maybe it's time to show the world that someone actually has a steering wheel.
100%: Who Is Actually Leading EV Innovation Now?
Can you believe that it's been almost 30 years since GM first introduced the EV1? I'm not sure if that's a long time or a little given how advanced EVs have become since—but if there's one thing that's really apparent, it's that the majority of EV innovation really began to show its head over the last few years.
We've talked a lot about China today, too. It's kind of insane how quickly we're seeing small players like Xiaomi become popular. Heck, even BYD feels insanely advanced when you consider that it's only six months older than Tesla.
Looking back home, there's a lot going on too. Rivian's R2 is ready to hit the road with an affordable SUV of its own, GM has finally found its footing in the EV space, Lucid's tech feels all but unmatched when put against even industry veterans, and, of course, I've yet to find a match that's as seamless as Tesla's approach to the connected car and software (not counting any progress on Full Self-Driving).
That being said, what automaker do you think is leading the way in EV innovation? Let me know who comes to mind, and why, in the comments.
